Netherlands-based Aegon (AEG, AGN) a diversified, international financial services group on Thursday announced it has reached an agreement with a.s.r. Nederland N.V. to combine its Dutch pension, life and non-life insurance, banking, and mortgage origination activities.
Aegon would receive 2.5 billion euros in gross cash proceeds, and a 29.99 percent strategic stake in a.s.r. valued at 2.4 billion euros based on the closing price of a.s.r.’s shares on October 26. Accordingly, 57 million shares would be received by Aegon upon closing of the transaction, before any potential equity offering by a.s.r. as part of the funding of the transaction.
a.s.r ranks among the top 3 insurers in the Netherlands and the combination would create a leading Dutch insurance company, in line with Aegon’s ambition to build leaders in chosen markets.
The transaction would enable Aegon to accelerate its strategy of releasing capital from mature businesses and to become a leader in markets with opportunities for growth. Aegon’s intention is to use the cash proceeds to return 1.5 billion euros of capital to shareholders and reduce leverage by up to 700 million euros.
The deal would also allow Aegon to increase its 2023 dividend per share target from around 0.25 euro to around 0.30 euro.
Aegon’s Dutch asset management activities would remain part of Aegon’s global asset manager. Aegon would enter into a long-term asset management agreement with a.s.r. to manage parts of the combination’s general account investments, the investments of the Premium Pension Institution (PPI) offering of Aegon Cappital, and a.s.r.’s mortgage funds.
The transaction is expected to close in the second half of 2023.
Shares of Aegon closed Wednesday’s trading at $4.32, down $0.09 or 2.04 percent from the previous close.
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